HROB 151: FINAL EXAM

Discuss five rater errors in performance management. (SA)

"Similar to Me" is the error we make when we judge those who are similar to us more highly than those who are not. Contrast errors occur when we compare individuals with one another instead of with an objective standard. Leniency- Rater gives high ratings to all employees regardless of their performance. Strictness- Rater gives low ratings to all employees regardless of their performance. Central Tendency- Rater gives middle or average ratings to all employees despite their performance. Halo errors occur when one positive performance aspect causes the rater to rate all other aspects of performance positively. Horns error works in the opposite direction: one negative aspect results in the rater assigning low ratings to all the other aspects.

Distinguish types of rating errors and explain how to minimize each in a performance evaluation.

"Similar to Me" is the error we make when we judge those who are similar to us more highly than those who are not. Contrast errors occur when we compare individuals with one another instead of with an objective standard. Leniency- Rater gives high ratings to all employees regardless of their performance. Strictness- Rater gives low ratings to all employees regardless of their performance. Central Tendency- Rater gives middle or average ratings to all employees despite their performance. Halo errors occur when one positive performance aspect causes the rater to rate all other aspects of performance positively. Horns error works in the opposite direction: one negative aspect results in the rater assigning low ratings to all the other aspects. rater error training frame-of-reference or rater accuracy training calibration meetings: attended

List pay programs' advantages and disadvantages.

Advantages: helps an employer differentiate between the performance of high and low performing employees and reward the performance of the higher performers. This is a retention effort because no employer wants to lose the organization's best performers. allows an employer to differentiate between the performance of the company as a whole and the performance of an individual. provides a vehicle for an employer to recognize individual performance on a one-time basis. This is useful for rewarding employees who may have participated in a one-time project such as implementing a new HRIS or opening up a new sales territory. Disadvantages: There is no way, with 100% accuracy, to differentiate the performance of various employees to determine who is most deserving of merit pay. The amount of time and energy that organizations invest in an attempt to make performance measurable for merit pay, including developing competencies, measurements, baselines for performance, and so forth, is better spent on delivering service for customers. Given the limitations of metrics, the ability of the supervisor to communicate to each employee the value of his or her contribution, and what superior performance worthy of merit pay entails, is an ongoing challenge.

Define benchmarking and its role in compensation management.

Benchmarking - a procedure in which an organization compares its own practices against those of successful competitors Knowing what other organizations are paying and knowing what those organizations are getting in return for their investment in employees is helpful. To find that out, some organizations examine ratios such as revenues/employees and revenues/labor cost. it is important to use "big data" technology to go beyond simple benchmarking and better understand what value is created for a company by choosing different pay levels. Benchmarking pay surveys provide information on the going rates of pay of the competition. The following issues must be determined before pay surveys are used: Which employers should be included in the survey? Which jobs are included in the survey? If multiple surveys are used, how are all the rates of pay weighted and combined? Grade compa-ratio = Actual average pay for grade/Pay midpoint for grade

Discuss four performance measurement methods, specific techniques used in each approach and ways these approaches compare with criteria for effective PMS.

Comparative: compares performance with others. -ranking: Simple- highest to lowest alternation: crosses off best and worst employee. forced: predetermined paired: compre every employee with every other employee in work group. positive: Relatively easy to develop negative: common failure to link to goals of organization Attribute: Graphic rating: list of traits evaluated by 5-point rating scale -legally questionable -mixed standard: define relevant performance dimensions. - develop statements representing good average, and poor performance along each dimension. Positive: Generalizable across a variety of jobs Negative: Vague performance standards Behavior: Behaviorally anchored rating scales Behavioral observation scales Competency models Positive: Based on in-depth job analysis Negative: Must be constantly monitored and revised Results: The use of objectives Balanced scorecard Productivity measurement and evaluation system Positive: Minimizes subjectivity Negative: Objective measures can be contaminated

Discuss flexible spending accounts, citing their purpose, benefits, and drawbacks (SA).

Flexible Spending Accounts: Permits pretax contributions to an employee account that can be drawn on to pay for uncovered health care expenses. Funds must be spent during the year or they revert to the employer. Major advantage is take-home pay increases. Pros: Tax savings, medical savings, increased take home pay, immediate availability of funds, and debit card. Cons: Limitations, expiration, lose you job lose your benefits, limited enrollment period, and no tax write offs. `

Understand how to improve performance feedback.

Give ongoing feedback, meaning weekly, monthly, every six months. Give constructive feedback. Make sure to start out with positives then lead to things the employee can work towards;

What are individual incentives? How are they different from merit pay? (SA)

Individual incentives reward individual performance but payments are not rolled into base pay. Performance is measured as physical output rather than by subjective ratings. Merit pay programs link performance-appraisal ratings to annual pay increases.

Discuss how pay influences individual employees.

It makes the employee want to perform better and produce a better outcome so they can get more money.

Describe a job evaluation system.

Job evaluation - administrative procedure used to measure internal job worth. The evaluation process is composed of compensable factors, which are characteristics of jobs that an organization values and chooses to pay. Such as experience, education, complexity, working conditions, and responsibility Job evaluators often apply a weighting scheme to account for differing importance of compensable factors to the organization.

*** Describe key jobs and nonkey jobs. For which of these are market surveys attainable? Give an example of a key job and a nonkey job (SA) ***

Key jobs - benchmark jobs that have relatively stable content and are common to many organizations so that market-pay survey data can be obtained. Non-key jobs are unique to organizations and cannot be directly valued or compared through the use of market surveys. For key jobs market surveys are attainable EXAMPLES: Key job: Cashier Nonkey Job: Security for the newly purchased equip. Security operations advisor. Gives advice to all users for the system.

Understand pay grades.

Pay Grades - Grouping jobs of similar worth or content together for pay administration purposes. Range spread - distance between minimum & maximum amounts in a pay grade.

Explain how organizations develop a market pay policy line.

Pay Policy Line - mathematical expression that describes the relationship between a job's pay and its job evaluation points. Use the points to see where it falls on the line to see if the job is work 50K because you don't have market surveys.

Define performance management and performance appraisal.

Performance Management: -Strategic business considerations - Driven by line manager -Ongoing feedback - So employee can improve performance Performance appraisal: -Driven by HR -Assesses employee - Strengths and Weaknesses - Once a year -Lacks ongoing feedback

Compare and contrast product market competition with labor market competition in compensation decisions.

Product-market competition-challenge to sell goods and services at a quantity and price that will bring a return on investment. Product-market comparisons will be more important when: Labor costs represent a large share of total costs. Product demand is elastic. The supply of labor is inelastic. Employee skills are specific to the product market. Labor-market comparisons will be more important when: Attracting & retaining employees is difficult. Costs of recruiting are high. Labor-market competition-amount an organization must pay to compete against other organizations that hire similar employees.

Describe three theories (reinforcement, expectancy and agency) that explain compensation's effect on individuals.

Reinforcement Theory - a response followed by a reward is more likely to recur in the future. Expectancy Theory - motivation is a function of valence, instrumentality and expectancy. Agency Theory- interests of principals (owners) and their agents (managers) may no longer converge.

Identify five criteria for effective performance management systems (PMS).

Specificity: Guidance of expectations Acceptability: Whether the people who use the performance measure accept it. Fair or not. Reliability: The consistency of the performance measure Validity: The extent to which the performance measure assesses all the relevant aspects of job performance. Strategic Congruence: Congruent with the organization's strategy, goals, and culture.

Understand the point-factor system.

Using points to rate the importance of the job, used to determine pay grade.

non-key jobs

are unique to organizations and cannot be directly valued or compared through the use of market surveys.

key jobs

benchmark jobs that have relatively stable content and are common to many organizations so that market-pay survey data can be obtained.

Job Structure

is the relative pay of jobs in organizations (i.e., the range of pay often expressed by salary grades).

Equity Theory

people evaluate fairness of their pay by comparing their pay to that of other people. A person will compare his or her ratio of perceived outcomes (e.g., pay, benefits, etc.) to perceived inputs (e.g., education, effort, experience) to the ratio of a comparison other. Employees evaluate their pay by comparing it with what others get paid, and their work attitudes and behaviors are influenced by such comparison. If the person's ratio is higher, rationalization will occur to account for the perceived overpayment. If the comparison other's ratio is higher, the person may attempt to restore equity by reducing one's inputs (e.g., working less), increasing one's outcomes (e.g., asking for a raise, theft), or leaving the company.

Pay Structure

refers to the relative pay of different jobs (job structure) and how much they are paid (level).

Describe pay programs for recognizing employees' contributions to the organization's success.

skill based merit pay gain sharing incentive pay ownership profit sharing